This great growth stock has skyrocketed nearly 60,001 TP3T in the last 5 years: Why I don't buy it!

If you're a fan of picking stocks, there's no doubt that your hope is that these companies will outperform the Big Pan Index. Since March 2019(math.) genusNasdaq Resonanceindices(Nasdaq Composite The dividend has gone up by 124%.(math.) genusThis is a difficult task. The

However, there are some companies that definitely outperform the index. Celsius (NASDAQ resonance stock code: CELH)That's the best proof. The seller of functional energy drinks has seen its stock price soar by 58,70% in the last five years, meaning an investment of $1,000 in the past is now worth nearly $60,000 today.

Benefiting from the tremendous momentum ofThis one. Drinks Unit in It will continue to soar in 2024. But I'm not buying it. Here's why

Excessive expectations

It may come as no surprise that Celsius shares have risen tremendously, but the stock isn't cheap. Its current PE ratio This is not a bargain by any stretch of the imagination. In contrast, the tech-heavy Nasdaq Resonance 100indices The current P/E ratio is 31Times.

Despite the growth potential of Celsius (which I will discuss below), its share price is ridiculously high. This suggests that investors currently have very high expectations for the stock. Where the price-to-earnings ratio is so high, it increases the downside risk. For example, if Celsius's revenue fails to meet Wall Street's expectations, even by a few million dollars, the stock price could plummet. Or, if management provides poor guidance, the stock could fall.

Celsius's bull market may be linked to Monstersimilar (math.) genus latteris the first familymarket value $62 billion (used form a nominal expression) Energy drink competitor, whose stock price has soared 51,00% in the last 20 years, may help explain Celsius' soaring stock price, as investors who may have missed this opportunity won't want to miss out on owning one of the industry's newest players.

The Great Growth of Sergius

Celsius has seen phenomenal growth over the past few years, and I can't argue with that. Three years ago, in 2020, total revenue was $131 million. 2023, revenue reached $1.3 billion.

It is no wonder that the share price has performed so well, as Celsius has focused on positioning the company's energy drinks from a marketing and branding perspective, primarily as functional beverages with natural ingredients and caffeine blends, which have been very well received by consumers.

The brand is AmazonThe Best Selling Energy Drink on (math.) genusIt exceeded the red bull and the beast mentioned in the noodles. It's an impressive feat. The e-commerce site receives billions of visitors each month, providing Celsius with a wide range of potential customers.

and PepsiCo(used for emphasis)Carbide is another recent development that will help the company's business development The beverage and snack giant is responsible for Celsius' distribution in the U.S. and worldwide. The beverage and snack giant is responsible for Celsius' distribution in the U.S. and globally, an operation that began last August.

Clearly, this is a business that is going all out at the moment. previous yearThe company'sNet income Reached US$228 millionIt's a reality.profitability The It is difficult to find any shortcoming in this regard.

The problem is that the market has fully realized how well Celsius has performed. Where expectations are so high, as indicated by the steep P/E ratio, the stock looks like it's priced for perfection.

I don't really believe that Celsius has a long term viability either. There are basically no barriers to entry, and anyone with enough start-up capital can produce their own energy drink. In addition, consumer tastes and preferences are constantly changing. Time will tell what the industry will look like in ten years' time, but that's just my opinion.

Over the past five years, Celsius has been a very profitable investment for investors. But from today's perspective, I don't think it was a wise investment.

Should you invest $1,000 in Celsius now?

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John Mackey, former Chief Executive Officer of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's Board of Directors. Neil Patel and his clients have no positions in any of the stocks mentioned above. the Motley Fool has positions in Amazon, Celsius and Monster Beverage and recommends these stocks. the Motley Fool has a disclosure policy.

This gorgeous growth stock has soared nearly 6000% in the past 5 years: Why I'm not buying it.